Thinking, Fast and Slow - Daniel Kahneman

[Liberty]

Thinking, Fast and Slow

http://www.nytimes.com/2011/10/21/opinion/brooks-who-you-are.html?_r=1

Coming out soon. His research into cognitive biases and heuristics is very helpful to any value investor who tries to have an edge by being more rational than the market. I also recommend:

Judgment Under Uncertainty:  Heuristics and Biases

Heuristics Biases:  The Psychology of Intuitive Judgment

[eclecticvalue]

I read the article in the NYT. My takeaway from the article is he thinks any of the great investors that have done very well. All of their success is attributed to luck. The few paragraphs that talks about overconfidence was great.

[Liberty]

I read the article in the NYT. My takeaway from the article is he thinks any of the great investors that have done very well. All of their success is attributed to luck. The few paragraphs that talks about overconfidence was great.

I'm not sure I understand. Where does the NYT article talks about investing and luck?

In any case, the NYT piece is pretty superficial and that writer isn't known for his accuracy about scientific matters. I recommend reading the source material.

[eclecticvalue]

This is the link I was talking about. http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-hazards-of-confidence.html?pagewanted=all

[Liberty]

Thanks for the link. He seems to basically agree with Buffett and Munger that most of the finance industry adds very little value.

[eclecticvalue]

I agree the financial services industry doesn't provide much value. I gleaned from the article that most stock pickers don't do well and the very successful ones performance is all luck.

[Liberty]

I agree the financial services industry doesn't provide much value. I gleaned from the article that most stock pickers don't do well and the very successful ones performance is all luck.

He seems to have studied random wall street traders, so I'm not surprised that he came up with that conclusion. I don't think it's meant to applied to all investors, including value ones.

But in any case, what's most interesting about the work of Daniel K. and Amos T. is not their work that is directly about investing. It's more about this kind of stuff:

http://en.wikipedia.org/wiki/List_of_cognitive_biases

[twacowfca]

Kahneman and Tversky, may he rest in peace, tell it like is for the 99 % of investment advisors and fund managers that don't live in Graham and Doddsville or are just visiting. 

[eclecticvalue]

I wasn't sure if he meant value investors also. Thank you for your thoughts Liberty. I wonder what were his thoughts on value investors. Also the list of cognitive bias is very long I wonder if I could master all of them. I have made mistakes from those bias'

[Hester]

Sam Hrris is doing an interview with Kahneman and will be asking some questions submited by readers.

For anyone interested:

http://www.samharris.org/site/contact_author/